Stephen Miran from the Fed expresses a desire for a half-point interest rate reduction this month.

Stephen Milan Advocates for Aggressive Rate Cuts

Stephen Milan, the newly appointed Federal Reserve director by President Trump, expressed his intent on Thursday to advocate for a half-point interest rate reduction during the Fed’s upcoming meeting later this month.

Current expectations indicate that policymakers might opt for a quarter-point decrease, similar to last month’s decision. However, Milan believes a faster approach is necessary due to escalating trade tensions and economic uncertainties that pose risks to growth.

“If monetary policy stays tight and the economy faces a shock, the negative repercussions could be much more severe,” he mentioned during an interview with Fox Business.

He emphasized that the ongoing trade war with China regarding rare earth minerals heightens the urgency for rate cuts.

Despite his push for a more significant reduction, Milan recognized that the Fed may only proceed with a 25 basis point cut.

“In my opinion, it should be 50 basis points,” he noted. “But I do expect we’ll see 25 basis points cut, along with possibly three such cuts this year, totaling 75 basis points.”

Milan cautioned that a downturn in employment might lead to a rise in the unemployment rate, suggesting that reducing rates could foster economic recovery.

Last month, the Fed cut rates by a quarter-point, acknowledging challenges in the labor market. This marked their first rate decrease since December 2024.

With inflation still exceeding the Fed’s 2% target, some officials are leaning towards a more cautious stance.

Recent government data revealed that U.S. consumer inflation reached 2.9% in August.

Christopher Waller, a prominent Fed Director and a potential successor to Chairman Jerome Powell in May 2026, also supports the notion of another quarter-point reduction in the upcoming meeting.

“Considering the labor market data, I believe we should cut rates by 25 basis points at the meeting concluding on October 29,” Waller stated at the Council on Foreign Relations.

He highlighted the importance of not “reigniting inflationary trends by acting too quickly,” and he acknowledged the signals from the labor market that suggest a need for readiness to respond should those indicators worsen.

Meanwhile, the Bureau of Labor Statistics has delayed the release of inflation and job data due to the ongoing government shutdown, now in its 16th day.

Milan remarked, “Having solid economic data would aid in making informed decisions.” He added that while it’s crucial to observe the economy for signs of inflation or job market shifts, the absence of data complicates the decision-making process, requiring reliance on forecasts.

It’s worth noting that Milan, who is expected to transition back to his role as the White House’s chief economist when his Fed term ends early next year, previously advocated for a half-point cut at last month’s meeting, although that proposal was ultimately voted down 11-1.